The Supreme Court has handed down its decision in the case of Arnold v Britton concerning the interpretation of service charge provisions in leases that provided for aggressive increases in the tenants’ service charge liabilities.
The leases of certain holiday chalets provided for payment of a fixed sum with a fixed 10% annual increase. The tenants were seeking to argue that the landlord was wrong in interpreting the service charge in such a way that the charges, which were already over £3,000 per year per chalet, would be over £1million per year by the time the leases came to an end in 2072. The tenants argued that the service charge provisions were in fact a cap on the charge the landlord could recover rather than a fixed sum payable by them.
However, the Supreme Court was of the view that the leases were clear as to how the service charge was to be calculated and that was as a fixed sum with a fixed annual increase even though the arrangement worked out badly for the tenants.
Mark Steggles, Partner in the Dispute Resolution Team, commented as follows:
This decision will be welcomed by landlords of all types of properties. It shows that the Courts will not look to interfere when service charges are clear but commercially unfair to one party.